The quantitative easing policy finally has a strong indirect impact on markets in Japan. Japan’s banks are flooding international financial markets with Yen while buying higher-yielding foreign bonds. Foreign investors, in return, are recycling these Yen into Japan’s stock market, which drives optimism in Japan. But because it is not the objective of the BOJ to drive down the exchange rate or to push Japanese money out of the country, it will stop the party on the first sign that deflation has become history.

Core CPI inflation for October should be zero. And even November figures for Tokyo show little improvement. But because of Tokyo's extreme regional concentration, the hike in energy prices is less important in Tokyo than in the rest of the country. So we should see positive inflation figures for Japan in November.